More About Retirement
You did it! You’ve walked through the LAFPP path and learned some basic retirement information.
We hope that we have made learning about your pension easy to follow. If you found this useful, please help us determine how many members we’ve reached by filling out the form at the start of this training.
The information below is provided to give you an overall understanding of retirement and retirement planning. These are presented in a Q&A format that you may find useful as you plan for your future.
What is a Defined Benefit Plan?
A Defined Benefit (DB) Plan guarantees that a worker who meets eligibility requirements will receive a lifetime pension based on a formula. Different plans have varying service and age requirements. LAFPP is a DB Plan and requires a Tier 6 member to work at least 20 years and be at least age 50 in order to apply for retirement.
What are the benefits of having a Pension?
With a pension, you’ll have retirement income for the rest of your life and may even provide for your survivors upon your death.
What does “vesting” mean?
Vesting is a scheduled time of when you have a right to your pension. For the purpose of a Nonservice-Connected Disability Retirement, members must have worked at least 5 years in order to qualify. To receive a full pension, you must be at least age 50 and have worked for a minimum of 20 years.
How long do I have to work until I can collect my pension?
As a Tier 6 member, you will qualify to apply for retirement once you reach the age of 50 and at least 20 years of service. You must attain both requirements to be eligible to retire.
How much money will I get and when can I get the money?
You will receive a monthly pension in retirement. Your pension will be determined by a formula of:
Average 24 Month Salary x Pension Percentage (depending on Years of Service)
See chart here.
Does having a pension mean I don’t have to save money on my own for retirement?
When you retire, you will receive a percentage of your active pay (see pension percentage chart). If your pension can provide for all of your future day-to-day expenses, you may choose not to save any extra. However, the Deferred Compensation plan is a viable option to save additional money for retirement.
What is Deferred Compensation?
Deferred Compensation is a voluntary program offered by the City to help supplement your pension. You can save a portion of your paycheck on a pre- or post-tax basis and choose how those dollars are invested.
What happens if I decide to leave or retire early?
A normal retirement allows you to begin receiving your monthly pension payment once you leave work based on a formula. In cases where a member leaves prior to their retirement eligibility, there may be options available.
Read about “Options When Leaving” in the Miscellaneous Provisions Section of the walk-through.
Is my future pension safe?
As a defined benefit pension plan, your benefits are guaranteed by the City based on the formula provided under Tier 6.
Can I borrow money from my plan?
The LAFPP Plan does not allow for members to borrow against their pension.
Do I have to pay taxes on the money I get when I retire?
Yes – pension payments are considered personal income and will be taxed according to the Federal and State income tax laws.
Can my spouse get my pension if I die?
A legal spouse or domestic partner can receive a portion of your pension payments if they qualify. Details are available in our Survivor Benefits section.
Can the amount of my pension change? Will my pension be increased to cover inflation?
The Cost of Living Adjustment (COLA) allows for your future pension benefits to be increased during times of inflation and can be reduced during times of deflation. Rest assured that during times of deflation, your pension cannot be reduced to less than your original pension payment. Additional information is available on our Tier 6 COLA Page.
What happens if I change jobs outside the City of LA?
There are options for you depending on your situation. Read more about “Options When Leaving” in the Miscellaneous Provisions Section of the walk-through.
What happens if I am called for active military service?
As a Tier 6 member, there are provisions that allow for you to serve in the military while an active employee. You may continue to accrue years of service while serving in the military as if you were continuously employed by the City.
What happens if I get a divorce?
Read about “Dissolution of Marriage” in the Miscellaneous Provisions Section of the walk-through.
What happens if I become disabled before I retire?
Depending on the circumstances and your eligibility, a Disability Pension may be an option for you. Visit our Disability Pensions module to learn more.
What happens if I die before I retire?
Your survivors may have the option to receive a lifelong Survivors Pension or a Return of Contributions, including any interest. Visit the Survivor Benefits module to learn more.
Who decides what I must contribute to the plan?
Your contributions are 11% of your salary, as defined by the LA City Charter.
How is LAFPP different from Social Security?
Social Security is a Federal Government program designed to provide payments to an individual in retirement. During an employee’s work-life, he/she contributes to Social Security in return for a lifelong payment. As an employee of the City of LA, you do not contribute to Social Security.
What’s the difference between an LAFPP pension and a 401k?
As a defined benefit plan, your LAFPP pension promises you regular lifetime payments based on a set formula. You contribute a specific amount of your salary in return for a formula-based benefit in retirement.
A 401k is an employer plan generally offered by private/business entities. You and/or your employer put money into an account that, over time, will hopefully grow large enough to support you in retirement. Your future benefits are limited to the funds in your account.
Sign up for one of our Seminars/Webinars or view our Helpful Videos page to learn more about your pension benefits. You may also view or update your beneficiaries and run a retirement estimate by logging in to MyLAFPP. For all other needs, please contact the Active Member Services Section at (213) 279-3140.
For feedback, concerns, questions or if you would like an individual counseling session regarding any of the topics discussed, please contact the Communications and Education Section at (213) 279-3155. We are available Monday-Friday from 7:30 a.m. to 4:30 p.m. (except on holidays). For inquiries outside of our regular business hours, please send an email to email@example.com or on our Contact Us page.